Factors of Production And Economic Systems Obj: Students will understand how limited factors of production require economic systems to distribute resources. Agenda: Quiz Inputs of Mustang? Factors of Production 3 Minute Case Study China’s Ghost Cities

The Factors of Production Labor—exchanged for wages Physical Capital—exchanged for interest Investment—purchase of physical capital now with intent of benefiting later from it Land, or natural resources—exchanged for rent Entrepreneurship—bring together all else (pay interest, wages, and rent) in search of profit

Income Due to the exchanges that take place surrounding factors of production, the sum of wages earned, rent paid, interest collected, and profits gained is called income Factor payments Welfare, scholarship, grants, loans???

What is an economy? What does it do? What are its aims? Mechanisms? How is one better than another? Is there a perfect economy? Definition… A system that coordinates choices about production with choices about consumption, and then distributes goods and services to the people who want them.